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Bona Vacantia on share premium account

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Hi All, could you help me out with this one.

A local authority invested in a limited company and the investment has not worked out and they want to wind up the company. The company is wholly owned by the authority. At the moment there initial investment (which is over £4k) has been treated as share premium. The company has no other creditors.  The preferred option will be to do a solvent strike off (to avoid further costs of liquidation). The authority has accepted that the investment will be lost but if they strike off the company with the investment treated as share premium could they then be exposed to a Bona Vacantia claim? If this is the case is there anyway to mitigate this?  thanks in advance for any advice.

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By jcace
21st May 2019 20:43

What assets does the company have?

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By johngroganjga
22nd May 2019 07:57

I may be misunderstanding your question, but you seem to think that a company’s share premium is one of its assets, which may be forfeit to the Crown if not distributed before the company is struck off.

If that is your question, the answer is that share premium is not an asset. It’s part of the company’s capital, on the other side of its balance sheet from any assets.

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By Morebeans
22nd May 2019 11:01

No assets - the only 'equity' is a share premium offset by a retained loss.
I understand that that the share premium is not an asset so I am assuming, therefore, if it is struck off with a share premium balance that there is no risk of a Bona Vacantia claim?

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Replying to Morebeans:
By johngroganjga
22nd May 2019 11:05

Having a share premium account is nothing to do with it.

If the company has no assets then of course a Bona Vacantia claim cannot arise. I am not sure why you ever thought it might.

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By Vaughan Blake1
22nd May 2019 11:45

My basic rule of thumb is that if an item can be used to pay for or exchange for beer then it's an asset. Try paying for a round of drinks with a share premium account and see what happens.

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